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Airlines' Tax Burden May Weigh On Private Jets

Monday, 14 May 2007 | 6:58 PM ET

President George W. Bush’s proposal to cut commercial airline taxes by $1.68 billion each year has sparked fierce debate in Washington. Aviation experts joined “Street Signs” to argue each side of the issue.

Jets & Taxes
Bush proposes that corporate jets pay a share of the taxes currently bourne by commercial airlines, with Todd Rome Founder & President Blue Star Jets; James May, Air Transport Association President & CEO and CNBC's Erin Burnett

James May, president and CEO of the Air Transport Association, said passengers on commercial jets currently subsidize costs on corporate and private planes. “Whether it’s a Gulfstream Four or a 737, the demand that it places on the air-traffic control system is the same,” he said. “All we’re suggesting is there ought to be a balance…and pay for what you use.”

Some 18,000 corporate planes occupy airspace, versus 8,000 commercial jets, May said. And airspace is the fundamental concern, not airport location, he explained: “It’s not whether you’re flying into Teterboro or Newark, it’s whether or not you’re flying into crowded airspace,” he said. “And the formula is designed to take into account small markets.”

However, Todd Rome, founder and president of private-charter firm Blue Star Jets, pointed to the “hub-and-spoke” as the central problem: “If you look at the rural airports throughout our country, they rely on general aviation,” he said. “I don’t know how you can ask the same customer who’s flying on a turbo prop -- three folks going on a business trip -- to pay the same amount as 250 people on a commercial airliner.”

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  • Brian Sullivan is co-anchor of CNBC's "Street Signs."

  • Co-anchor of CNBC's "Street Signs," Amanda Drury is based at the network's global headquarters in Englewood Cliffs, N.J.